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Optimizing the US mortgage market with AWS

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Common Securitization Solutions (CSS), a joint Freddie Mac and Fannie Mae venture launched in 2013, supports a cornerstone of the American economy: home ownership. CSS built and now operates the largest and most advanced mortgage securitization platform in the US, supporting Freddie Mac and Fannie Mae’s 70 percent market share of the industry with flexibility, scalability, and security at its core. CSS uses Amazon Web Services (AWS) to power their solutions in the cloud.

Leveraging the AWS Cloud Adoption Framework (AWS CAF), CSS manages $6.4 trillion of mortgage-backed securities (MBS) on behalf of Fannie Mae and Freddie Mac, as well as daily issuance of Uniform Mortgage-Backed Securities (UMBS). The UMBS makes up 70 percent of the total MBS market in the US and was established in the wake of the 2008 financial crisis to provide stability, liquidity, and resiliency in the US housing market.

Featuring layered security architecture, high-speed and low-latency networks, and business continuity with full disaster recovery within 4 hours, CSS’s Common Securitization Platform (CSP) is integral in supporting the financial services industry. With cloud-native scalable technology, CSS navigated a 70 percent volume increase due to market-related demands brought on by the COVID-19 pandemic without any interruptions in service. Plus, CSS realized $10.7 million in total annual AWS run rate cost optimization by the end of 2023.

Born in the cloud

Development of the CSP began in 2013 to provide a modern, single-family securitization infrastructure for Fannie Mae and Freddie Mac. The decision to develop and host the CSP in the AWS Cloud put CSS among the first enterprises to adopt the cloud and build and manage one of the first mission-critical cloud-native applications.

Launching the CSP with AWS

CSS worked closely with AWS from the outset of the CSP project launch in 2014. Amazon CEO Andy Jassy, who was with AWS at the time, operated as an executive sponsor for the engagement, providing a direct escalation path to prioritize the project’s success. Throughout the development, deployment, and operation of the CSP, the AWS account team and CSS collaborated in weekly operations calls, increasing in cadence during critical milestones. During the CSP go-live event, AWS supported the launch through AWS Countdown, which offers architecture and scaling guidance and operational support during the preparation and execution of planned events. This included AWS Well-Architected Framework reviews, close engagement with enterprise support, run-book development, and technical account manager engagement to address any issues during the go-live process.

Modernization journey

The CSP launch culminated several years of application development to build a cloud-native platform for mortgage securitization. CSS delivers an industry-critical function and is regulated by the Federal Housing Finance Agency (FHFA). CSS maintains stringent risk management standards and modern cloud architecture and delivery technologies that reflect its criticality and the potentially catastrophic effect a platform failure would have on the mortgage market.

In 2016, CSS initially designed the CSP to run on Amazon Elastic Compute Cloud (Amazon EC2) as a traditional server-based architecture within a single AWS Region. In 2019, CSS released a major feature as part of go-live to support a 4-hour recovery time objective (RTO) and recovery point objective (RPO) of zero to support zero data loss requirements, using Amazon Simple Storage Service (Amazon S3) cross-Region replication. With this launch, the CSP synchronously commits ingested data to Amazon S3 in two US Regions to create strong data consistency, support all recovery needs, and move to an active-active architecture.

Benchmarking progress

The AWS whitepaper, Cloud Value Benchmark Study Quantifies the Benefits of Cloud Adoption, recommends four key performance indicators (KPIs) to measure cloud-value realization for organizations. CSS closely monitors these KPIs to benchmark progress toward their cloud-value business case:

  • Cost savings – Decrease IT costs by moving infrastructure to the cloud—including compute, storage, and networking—and eliminating the power, space, cooling, maintenance, and other operational costs associated with on-premises technology.
  • Staff productivity – Enable employees to shift from tactical to strategic work by reducing time spent by full-time IT employees on system administration tasks.
  • Operational resilience – Strengthen IT security and increase service availability and reliability, including gaining the elasticity to respond to rapidly changinglevels of demand.
  • Business agility – Increase return on investments due to faster time-to-market, greater product diversity, increased innovation, and faster global expansion. Thisarea also includes the ability of IT to roll out new and updated services faster.

AWS enabled CSS to scale quickly, while simultaneously improving performance and reducing costs as shown in Figure 1. Since 2019, issued security volume has stayed high while service level performance has increased and AWS run costs have decreased.

This graph shows the volume of issued securities, service level performance and AWS run costs at CSS from 2019 to 2023. Over this period, issued security volume stayed high while service level performance increased and AWS run costs decreased.

Figure 1. Key performance indicators for CSS cloud value.

With AWS services, CSS demonstrated scalability during volume increases, while transitioning to a fully remote workforce during the pandemic with no disruption to the market. Throughout 2021, CSS entered a phase of rapid optimization, implementing containerization with Amazon Elastic Container Service (Amazon ECS) and AWS Fargate, and Amazon Simple Notification Service (Amazon SNS) and Amazon Simple Queue Service (Amazon SQS) messaging to add further stability and efficiency to the platform. Operational costs were reduced by $10.7 million from launch.

In 2022, CSS retired its colocation hosting contracts, eliminating the need for hardlines with AWS PrivateLink connection with Freddie Mac and direct Amazon S3 to Amazon S3 integration with Fannie Mae. This created further savings and operational resiliency for CSS.

In 2023, the latest measure by CSS in fortifying CSP resiliency is the implementation of active-active AWS multi-Region architecture to support immediate, near real-time recovery, shortening the 4-hour RTO/RPO required window. Figure 2 shows the CSP platform multi-Region architecture that supports business resiliency requirements.

architectural diagram of how the Common Securitization Platform is set up in multiple Regions

Figure 2. Common Securitization Platform multi-Region architecture diagram.

By intelligently routing incoming requests and the ability to process them in both AWS Regions, CSS gains resilience and reduces downtime and cost while guaranteeing delivery with zero data loss.

Conclusion

Learn more about CSS, the criticality of the CSP in the US housing market, and how we utilize AWS by watching our panel from AWS re:Invent 2023.

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Lea Laman

Lea Laman

Lea Laman is Senior Vice President of Business Operations and Product Management at Common Securitization Solutions (CSS). She leads production operations and product management for the Single-Family Mortgage-Backed Security (SF MBS) business and the Enterprise Program Management office. Lea is a founding member of Chief, an organization that supports women in leadership roles, provides professional development, and drives change for women in the workplace.

Kristina Stepanek

Kristina Stepanek

Kristina is Principal of Business Operations at Common Securitization Solutions (CSS). She holds Bachelor of Science (BS) and Bachelor of Arts (BA) degrees from the University of Georgia and an MBA from the University of Virginia Darden Business School.

Laura Fox

Laura Fox

Laura is Manager of Cloud Governance Automation and Tools at Common Securitization Solutions (CSS). She focuses on cloud governance automation, cost optimization, and development tools infrastructure management. Laura holds two Bachelor of Arts (BA) degrees from the University of Maryland, College Park, and a master's in technology management from Georgetown University.

Manoj Shetty

Manoj Shetty

Manoj Shetty is a Vice President and Head of Infrastructure and Cloud Services at Common Securitization Solutions (CSS). He is passionate about leveraging technology for organizational growth and success, and how it can drive innovation and efficiency.

Mike Cochran

Mike Cochran

Mike is a principal solutions architect at Amazon Web Services (AWS) and oversees strategic technical engagements with Internal Revenue Service (IRS), U.S. Treasury Department, and housing customers. When he's not building enterprise architecture for federal financial workloads, he enjoys working on rotary engines, fishing, and farming on the gulf coast of Florida with his wife and four boys.